BILL NUMBER: AB 197	CHAPTERED  08/30/99

	CHAPTER   250
	FILED WITH SECRETARY OF STATE   AUGUST 30, 1999
	APPROVED BY GOVERNOR   AUGUST 30, 1999
	PASSED THE ASSEMBLY   AUGUST 16, 1999
	PASSED THE SENATE   JULY 15, 1999
	AMENDED IN SENATE   JULY 6, 1999
	AMENDED IN SENATE   JUNE 29, 1999

INTRODUCED BY   Assembly Member Ackerman

                        JANUARY 21, 1999

   An act to amend Sections 15679.1, 16101, 16901, 16903, 16905,
16906, 16907, 16911, 16914, 16915, 16916, and 17600 of, and to add
Article 7.4 (commencing with Section 15677.1) to Chapter 3 of Title 2
of, and to add Chapter 11.5 (commencing with Section 17540.1) to
Title 2.5 of, the Corporations Code, relating to legal entities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 197, Ackerman.  Limited partnerships and limited liability
companies: conversion.
   Existing provisions of the California Revised Limited Partnership
Act govern limited partnerships.  Limited liability companies are
regulated pursuant to the Beverly-Killea Limited Liability Company
Act.
   This bill would specify a comprehensive scheme for the conversion
of limited partnerships and limited liability companies into an other
business entity (defined to include a corporation, business trust,
and real estate investment trust), or a foreign limited partnership
or a foreign limited liability company, as applicable, subject to
certain conditions.  The bill would also specify certain service of
process requirements with respect to the merger or conversion of
partnerships to other business entities and the surviving domestic or
foreign business entities.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Article 7.4 (commencing with Section 15677.1) is added
to Chapter 3 of Title 2 of the Corporations Code, to read:

      Article 7.4.  Conversion

   15677.1.  For purposes of this article, the following definitions
shall apply:
   (a) "Converted entity" means the other business entity or foreign
limited partnership that results from a conversion of a domestic
limited partnership under this chapter.
   (b) "Converted limited partnership" means a domestic limited
partnership that results from a conversion of an other business
entity or a foreign limited partnership pursuant to Section 15677.8.

   (c) "Converting limited partnership" means a domestic limited
partnership that converts to an other business entity or a foreign
limited partnership pursuant to this chapter.
   (d) "Converting entity" means an other business entity or foreign
limited partnership that converts to a domestic limited partnership
pursuant to the terms of Section 15677.8.
   15677.2.  A limited partnership may be converted into an other
business entity or a foreign limited partnership pursuant to this
article if, pursuant to the proposed conversion, each of the partners
of the converting limited partnership receives a percentage interest
in the profits and capital of the converted entity equal to that
partner's percentage interest in profits and capital of the
converting limited partnership as of the effective time of the
conversion.  The conversion of a limited partnership to an other
business entity or a foreign limited partnership may be effected only
if both of the following conditions are satisfied:
   (a) The law under which the converted entity will exist expressly
permits the formation of that entity pursuant to a conversion.
   (b) The limited partnership complies with all other requirements
of any other law that applies to conversion to the converted entity.

   15677.3.  (a) A limited partnership that desires to convert to an
other business entity or a foreign limited partnership shall approve
a plan of conversion.  The plan of conversion shall state all of the
following:
   (1) The terms and conditions of the conversion.
   (2) The place of the organization of the converted entity and of
the converting limited partnership and the name of the converted
entity after conversion.
   (3) The manner of converting the limited and general partnership
interests of each of the partners into securities of, or interests
in, the converted entity.
   (4) The provisions of the governing documents for the converted
entity, including the partnership agreement or limited liability
company articles of organization and operating agreement, to which
the holders of interests in the converted entity are to be bound.
   (5) Any other details or provisions that are required by the laws
under which the converted entity is organized, or that are desired by
the parties.
   (b) The plan of conversion shall be approved by all general
partners of the converting limited partnership and by a majority in
interest of each class of limited partners of the converting limited
partnership, unless a greater or lesser approval is required by the
partnership agreement of the converting limited partnership.
However, if the limited partners of the limited partnership would
become personally liable for any obligations of the converted entity
as a result of the conversion, the plan of conversion shall be
approved by all of the limited partners of the converting limited
partnership, unless the plan of conversion provides that all limited
partners will have dissenters' rights as provided in Article 7.6
(commencing with Section 15679.1).
   (c) Upon the effectiveness of the conversion, all partners of the
converting limited partnership, except those that exercise dissenters'
rights as provided in Article 7.6 (commencing with Section 15679.1),
shall be deemed parties to any governing documents for the converted
entity adopted as part of the plan of conversion, irrespective of
whether or not the partner has executed the plan of conversion or the
governing documents for the converted entity.  Any adoption of
governing documents made pursuant thereto shall be effective at the
effective time or date of the conversion.
   (d) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by all general partners of the converting limited
partnership and, if the amendment changes any of the principal terms
of the plan of conversion, the amendment is approved by the limited
partners of the converting limited partnership in the same manner and
to the same extent as required for the approval of the original plan
of conversion.
   (e) The general partners of a converting limited partnership may,
by unanimous approval at any time before the conversion is effective,
in their discretion, abandon a conversion, without further approval
by the limited partners, subject to the contractual rights of third
parties other than limited partners.
   (f) The converted entity shall keep the plan of conversion at the
principal place of business of the converted entity if the converted
entity is a domestic partnership or foreign other business entity or
at the office at which records are to be kept under Section 17057 if
the converted entity is a domestic limited liability company.  Upon
the request of a partner of a converting limited partnership, the
authorized person on behalf of the converted entity shall promptly
deliver to the partner or the holder of interests or other
securities, at the expense of the converted entity, a copy of the
plan of conversion.  A waiver by a partner of the rights provided in
this subdivision shall be unenforceable.
   15677.4.  (a) A conversion into an other business entity, or a
foreign limited partnership shall become effective upon the earliest
date that all of the following occur:
   (1) The approval of the plan of conversion by the partners of the
converting limited partnership as provided in Section 15677.3.
   (2) The filing of all documents required by law to create the
converted entity, which documents shall also contain a statement of
conversion, if required under Section 15677.6.
   (3) The occurrence of the effective date, if set forth in the plan
of conversion occurs.
   (b) A copy of the statement of partnership authority or articles
of organization complying with Section 15677.6, if applicable, duly
certified by the Secretary of State, is conclusive evidence of the
conversion of the limited partnership.
   15677.5.  (a) The conversion of a limited partnership into a
foreign limited partnership or foreign other business entity shall be
required to comply with Section 15677.2.
   (b) If the limited partnership is converting into a foreign
limited partnership or foreign other business entity, those
conversion proceedings shall be in accordance with the laws of the
state or place of organization of the foreign limited partnership or
foreign other business entity and the conversion shall become
effective in accordance with that law.
   (c) (1) To enforce an obligation of a limited partnership that has
converted to a foreign limited partnership or foreign other business
entity, the Secretary of State shall only be the agent for service
of process in an action or proceeding against that converted foreign
entity, if the agent designated for the service of process for that
entity is a natural person and cannot be found with due diligence or
if the agent is a corporation and no person, to whom delivery may be
made, may be located with due diligence, or if no agent has been
designated and if no one of the officers, partners, managers,
members, or agents of that entity may be located after diligent
search, and it is so shown by affidavit to the satisfaction of the
court.  The court then may make an order that service be made by
personal delivery to the Secretary of State or to an assistant or
deputy Secretary of State of two copies of the process together with
two copies of the order, and the order shall set forth an address to
which the process shall be sent by the Secretary of State.  Service
in this manner is deemed complete on the 10th day after delivery of
the process to the Secretary of State.
   (2) Upon receipt of the process and order and the fee set forth in
Section 12206 of the Government Code, the Secretary of State shall
provide notice to that entity of the service of the process by
forwarding by certified mail, return receipt requested, a copy of the
process and order to the address specified in the order.
   (3) The Secretary of State shall keep a record of all process
served upon the Secretary of State and shall record therein the time
of service and the Secretary of State's action with respect thereto.
The certificate of the Secretary of State, under the Secretary of
State's official seal, certifying to the receipt of process, the
providing of notice thereof to that entity, and the forwarding of the
process shall be competent and prima facie evidence of the matters
stated therein.
   15677.6.  (a) Upon conversion of a limited partnership one of the
following applies:
   (1) If the limited partnership is converting into a domestic
limited liability company, a statement of conversion shall be
completed on the articles of organization for the converted entity.
   (2) If the limited partnership is converting into a domestic
partnership, a statement of conversion shall be completed on the
statement of partnership authority for the converted entity, or if no
statement of partnership authority is filed, then a certificate of
conversion shall be filed separately.
   (3) If the limited partnership is converting to a foreign limited
partnership or foreign other business entity, a certificate of
conversion shall be filed with the Secretary of State.
   (b) Any certificate or statement of conversion shall be executed
and acknowledged by all general partners, unless a lesser number is
provided in the certificate of limited partnership, and shall set
forth all of the following:
   (1) The name and the Secretary of State's file number of the
converting limited partnership.
   (2) A statement that the principal terms of the plan of conversion
were approved by a vote of the partners, which equaled or exceeded
the vote required under Section 15677.3, specifying each class
entitled to vote and the percentage vote required of each class.
   (3) The form of organization of the converted entity.
   (4) The mailing address of the converted entity's agent for
service of process and the chief executive office of the converted
entity.
   (c) The filing with the Secretary of State of a certificate of
conversion or a statement of partnership authority or articles of
organization containing a statement of conversion as set forth in
subdivision (a) shall have the effect of the filing of a certificate
of cancellation by the converting limited partnership and no
converting limited partnership that has made the filing is required
to file a certificate of dissolution or a certificate of cancellation
under Section 15623 as a result of that conversion.
   15677.7.  (a) Whenever a limited partnership or other business
entity having any real property in this state converts into a limited
partnership or an other business entity pursuant to the laws of this
state or of the state or place in which the limited partnership or
other business entity was organized, and the laws of the state or
place of organization, including this state, of the converting
limited partnership or other converting entity provide substantially
that the conversion vests in the converted limited partnership or
other converted entity all the real property of the converting
limited partnership or other converting entity, the filing for record
in the office of the county recorder of any county in this state in
which any of the real property of the converting limited partnership
or other converting entity is located of either (1) a certificate of
conversion or statement of partnership authority, or a certificate of
limited partnership or articles of organization complying with
Section 15677.6, in the form prescribed and certified by the
Secretary of State, or (2) a copy of a certificate of conversion or a
statement of partnership authority, certificate of limited
partnership, articles of organization or other certificate evidencing
the creation of a foreign other business entity or foreign limited
partnership by conversion, containing a statement of conversion,
certified by the Secretary of State or an authorized public official
of the state or place pursuant to the laws of which the conversion is
effected, shall evidence record ownership in the converted limited
partnership or other converted entity of all interest of the
converting limited partnership or other converting entity in and to
the real property located in that county.
   (b) A filed and, if appropriate, recorded certificate of
conversion or a statement of partnership authority, certificate of
limited partnership, articles of organization, or other certificate
evidencing the creation of a foreign other business entity or foreign
limited partnership by conversion, containing a statement of
conversion, filed pursuant to subdivision (a) of Section 15677.6,
stating the name of the converting limited partnership or other
converting entity in whose name property was held before the
conversion and the name of the converted entity or converted limited
partnership, but not containing all of the other information required
by Section 15677.6, operates with respect to the entities named to
the extent provided in subdivision (a).
   (c) Recording of a certificate of conversion, or a statement of
partnership authority, certificate of limited partnership, articles
of organization, or other certificate evidencing the creation of an
other business entity or a limited partnership by conversion,
containing a statement of conversion, in accordance with subdivision
(a), shall create, in favor of bona fide purchasers or encumbrances
for value, a conclusive presumption that the conversion was validly
completed.
   15677.8.  (a) An other business entity or a foreign limited
partnership may be converted to a domestic limited partnership
pursuant to this article only if the converting entity is not
prohibited by the laws under which it is organized to effect the
conversion.
   (b) An other business entity or a foreign limited partnership that
desires to convert into a domestic limited partnership shall approve
a plan of conversion or an instrument as is required to be approved
to effect the conversion pursuant to the laws under which that entity
is organized.
   (c) The conversion of an other business entity or a foreign
limited partnership shall be approved by the number or percentage of
the partners, members, or holders of interest of the converting
entity as is required by the law under which that entity is
organized, or a greater or lesser percentage, subject to applicable
laws, as set forth in the converting entity's partnership agreement,
articles of organization, operating agreement, or other governing
document.
   (d) The conversion by an other business entity or a foreign
limited partnership into a domestic limited partnership shall be
effective under this article at the time the conversion is effective
under the law under which the converting entity is organized as long
as a certificate of limited partnership has been filed with the
Secretary of State.  If the converting entity's governing law is
silent as to the effectiveness of the conversion, the conversion
shall be effective upon the completion of all acts required under
this title to form a limited partnership.
   15677.9.  (a) An entity that converts into another entity pursuant
to this article is for all purposes the same entity that existed
before the conversion.
   (b) Upon a conversion taking effect, all of the following apply:
   (1) All the rights and property, whether real, personal, or mixed,
of the converting entity or converting limited partnership are
vested in the converted entity or converted limited partnership.
   (2) All debts, liabilities, and obligations of the converting
entity or converting limited partnership continue as debts,
liabilities, and obligations of the converted entity or converted
limited partnership.
   (3) All rights of creditors and liens upon the property of the
converting entity or converting limited partnership shall be
preserved unimpaired and remain enforceable against the converted
entity or converted limited partnership to the same extent as against
the converting entity or converting limited partnership as if the
conversion had not occurred.
   (4) Any action or proceeding pending by or against the converting
entity or converting limited partnership may be continued against the
converted entity or converted limited partnership as if the
conversion had not occurred.
   (c) A partner of a converting limited partnership is liable for:
   (1) All obligations of the converting limited partnership for
which the partner was personally liable before the conversion.
   (2) All obligations of the converted entity incurred after the
conversion takes effect, but those obligations may be satisfied only
out of property of the entity if that partner is a limited partner, a
shareholder in a corporation, or unless expressly provided otherwise
in the articles of organization or other governing documents, a
member of a limited liability company, or a holder of equity
securities in an other converted entity if the holders of equity
securities in that entity are not personally liable for the
obligations of that entity under the law under which the entity is
organized or its governing documents.
   (d) A partner of a converted limited partnership remains liable
for any and all obligations of the converting entity for which the
partner was personally liable before the conversion, but only to the
extent that the partner was liable for the obligations of the
converting entity prior to the conversion.
   (e) If the other party to a transaction with the limited
partnership reasonably believes when entering the transaction that
the limited partner is a general partner, the limited partner is
liable for an obligation incurred by the limited partnership within
90 days after the conversion takes effect.  The limited partner's
liability for all other obligations of the limited partnership
incurred after the conversion takes effect is that of a limited
partner.
  SEC. 2.  Section 15679.1 of the Corporations Code is amended to
read:
   15679.1.  (a) For purposes of this article, "reorganization"
refers to any of the following:
   (1) A conversion pursuant to Article 7.4 (commencing with Section
15677.1).
   (2) A merger pursuant to Article 7.5 (commencing with Section
15678.1).
   (3) The acquisition by one limited partnership in exchange, in
whole or in part, for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity that is in control of the acquiring limited partnership) of
partnership interests or equity securities of another limited
partnership or other business entity if, immediately after the
acquisition, the acquiring limited partnership has control of the
other limited partnership or other business entity.
   (4) The acquisition by one limited partnership in exchange in
whole or in part for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity which is in control of the acquiring limited partnership) or
for its debt securities (or debt securities of a limited partnership
or other business entity which is in control of the acquiring limited
partnership) which are not adequately secured and which have a
maturity date in excess of five years after the consummation of the
acquisition, or both, of all or substantially all of the assets of
another limited partnership or other business entity.
   (b) For purposes of this article, "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a limited partnership or other
business entity.
  SEC. 3.  Section 16101 of the Corporations Code is amended to read:

   16101.  As used in this chapter, the following terms and phrases
have the following meanings:
   (1) "Business" includes every trade, occupation, and profession.
   (2) "Debtor in bankruptcy" means a person who is the subject of
either of the following:
   (A) An order for relief under Title 11 of the United States Code
or a comparable order under a successor statute of general
application.
   (B) A comparable order under federal, state, or foreign law
governing insolvency.
   (3) "Distribution" means a transfer of money or other property
from a partnership to a partner in the partner's capacity as a
partner or to the partner's transferee.
   (4) (A) "Foreign limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by the laws of another jurisdiction and
denominated or registered as a limited liability partnership or
registered limited liability partnership under the laws of that
jurisdiction (i) in which each partner is a licensed person or a
person licensed or authorized to provide professional limited
liability partnership services in a jurisdiction or jurisdictions
other than this state, (ii) which is licensed under the laws of the
state to engage in the practice of architecture, the practice of
public accountancy, or the practice of law, or (iii) which (I) is
related to a registered limited liability partnership that practices
public accountancy or, to the extent permitted by the State Bar,
practices law or is related to a foreign limited liability
partnership and (II) provides services related or complementary to
the professional limited liability partnership services provided by,
or provides services or facilities to, that registered limited
liability partnership or foreign limited liability partnership.
   (B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person,
except an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
   (5) "Licensed person" means any person who is duly licensed,
authorized, or registered under the provisions of the Business and
Professions Code to provide professional limited liability
partnership services or who is lawfully able to render professional
limited liability partnership services in this state.
   (6) (A) "Registered limited liability partnership" means a
partnership, other than a limited partnership, formed pursuant to an
agreement governed by Article 10 (commencing with Section 16951),
that is registered under Section 16953 and (i) each of the partners
of which is a licensed person or a person licensed or authorized to
provide professional limited liability partnership services in a
jurisdiction or jurisdictions other than this state, (ii) is licensed
under the laws of the state to engage in the practice of
architecture, practice of public accountancy, or the practice of law,
or (iii)(I) is related to a registered limited liability partnership
that practices public accountancy or, to the extent permitted by the
State Bar, practices law or is related to a foreign limited
liability partnership and (II) provides services related or
complementary to the professional limited liability partnership
services provided by, or provides services or facilities to, that
registered limited liability partnership or foreign limited liability
partnership.
   (B) For the purposes of clause (iii) of subparagraph (A), a
partnership is related to a registered limited liability partnership
or foreign limited liability partnership if (i) at least a majority
of the partners in one partnership are also partners in the other
partnership, or (ii) at least a majority in interest in each
partnership hold interests in or are members of another person, other
than an individual, and each partnership renders services pursuant
to an agreement with that other person, or (iii) one partnership,
directly or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, the other
partnership.
   (7) "Partnership" means an association of two or more persons to
carry on as coowners a business for profit formed under Section
16202, predecessor law, or comparable law of another jurisdiction,
and includes, for all purposes of the laws of this state, a
registered limited liability partnership, and excludes any
partnership formed under Chapter 2 (commencing with Section 15501) or
Chapter 3 (commencing with Section 15611).
   (8)  "Partnership agreement" means the agreement, whether written,
oral, or implied, among the partners concerning the partnership,
including amendments to the partnership agreement.
   (9) "Partnership at will" means a partnership in which the
partners have not agreed to remain partners until the expiration of a
definite term or the completion of a particular undertaking.
   (10) "Partnership interest" or "partner's interest in the
partnership" means all of a partner's interests in the partnership,
including the partner's transferable interest and all management and
other rights.
   (11) "Person" means an individual, corporation, business trust,
estate, trust, partnership, limited partnership, limited liability
partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality, or
any other legal or commercial entity.
   (12) "Professional limited liability partnership services" means
the practice of architecture, the practice of public accountancy, or
the practice of law.
   (13) "Property" means all property, real, personal, or mixed,
tangible or intangible, or any interest therein.
   (14) "State" means a state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United States.

                                                               (15)
"Statement" means a statement of partnership authority under Section
16303, a statement of denial under Section 16304, a statement of
dissociation under Section 16704, a statement of dissolution under
Section 16805, a statement of conversion or a certificate of
conversion under Section 16906, a statement of merger under Section
16915, or an amendment or cancellation of any of the foregoing.
   (16) "Transfer" includes an assignment, conveyance, lease,
mortgage, deed, and encumbrance.
   (17) The inclusion of the practice of architecture as a
professional limited liability partnership service permitted by this
section shall extend only until January 1, 2002.
  SEC. 4.  Section 16901 of the Corporations Code is amended to read:

   16901.  In this article, the following terms have the following
meanings:
   (1) "Constituent other business entity" means any other business
entity that is merged with or into one or more partnerships and
includes a surviving other business entity.
   (2) "Constituent partnership" means a partnership that is merged
with or into one or more other partnerships or other business
entities and includes a surviving partnership.
   (3) "Disappearing other business entity" means a constituent other
business entity that is not the surviving other business entity.
   (4) "Disappearing partnership" means a constituent partnership
that is not the surviving partnership.
   (5) "Domestic" means organized under the laws of this state when
used in relation to any partnership, other business entity, or person
(other than an individual).
   (6) "Foreign other business entity" means any other business
entity formed under the laws of any state other than this state or
under the laws of the United States or of a foreign country.
   (7) "Foreign partnership" means a partnership formed under the
laws of any state other than this state or under the laws of a
foreign country.
   (8)  "General partner" means a partner in a partnership and a
general partner in a limited partnership.
   (9) "Limited liability company" means a limited liability company
created under Title 2.5 (commencing with Section 17000), or
comparable law of another jurisdiction.
   (10) "Limited partner" means a limited partner in a limited
partnership.
   (11) "Limited partnership" means a limited partnership created
under Chapter 3 (commencing with Section 15611), predecessor law, or
comparable law of another jurisdiction.
   (12) "Other business entity" means a limited partnership, limited
liability company, corporation, business trust, real estate
investment trust, or an unincorporated association (other than a
nonprofit association), but excluding a partnership.
   (13) "Partner" includes both a general partner and a limited
partner.
   (14) "Surviving other business entity" means an other business
entity into which one or more partnerships are merged.
   (15) "Surviving partnership" means a partnership into which one or
more other partnerships or other business entities are merged.
  SEC. 5.  Section 16903 of the Corporations Code is amended to read:

   16903.  (a) A partnership that desires to convert to a domestic
limited partnership or limited liability company or foreign other
business entity shall approve a plan of conversion.  The plan of
conversion shall state the following:
   (1) The terms and conditions of the conversion.
   (2) The place of the organization of the converted entity and of
the converting partnership and the name of the converted entity after
conversion, if different from that of the converting partnership.
   (3) The manner of converting the partnership interests of each of
the partners into securities of or interests in the converted entity.

   (4) The provisions of the governing document for the converted
entity, such as a limited partnership agreement or limited liability
company articles of organization and operating agreement, to which
the holders of interest in the converted entity are to be bound.
   (5) Any other details or provisions as are required by laws under
which the converted entity is organized.
   (6) Any other details or provisions that are desired.
   (b) The plan of conversion shall be approved by that number or
percentage of partners required by the partnership agreement to
approve a conversion of the partnership as set forth in the
partnership agreement.  If the partnership agreement fails to specify
the required partner approval for a conversion of the partnership,
the plan of conversion shall be approved by that number or percentage
of partners required by the partnership agreement to approve an
amendment to the partnership agreement unless the conversion effects
a change for which the partnership agreement requires a greater
number or percentage of partners than that required to amend the
partnership agreement, in which case the plan of conversion shall be
approved by that greater number or percentage.  If the partnership
agreement fails to specify the vote required to amend the partnership
agreement, the plan of conversion shall be approved by all partners.

   (c) If the partnership is converting into a limited partnership,
in addition to the approval of the partners as set forth in
subdivision (b), the plan of conversion shall be approved by all
partners who will become general partners of the converted limited
partnership pursuant to the plan of conversion.
   (d) All partners of the converting partnership except those that
dissociate upon effectiveness of the conversion pursuant to
subdivision (e) of Section 16909 shall be deemed parties to any
partnership or operating or organic document for the converted entity
adopted as part of the plan of conversion, regardless of whether
that partner has executed the plan of conversion or the operating or
partnership agreement or other organic document for the converted
entity.  Any adoption of a new partnership, operating agreement, or
other organic document made pursuant to the foregoing sentence shall
be effective at the effective time or date of the conversion.
   (e) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by the partnership in the same manner, and by the same
number or percentage of partners, as was required for approval of the
original plan of conversion.
   (f) The partners of a converting partnership may, at any time
before the conversion is effective, in their discretion, abandon a
conversion, without further approval by the partners, in the same
manner, and by the same number or percentage of partners, as was
required for approval of the original plan of conversion at any time
before the conversion is effective, subject to the contractual rights
of third parties.
   (g) The converted entity shall keep the plan of conversion at:
(1) the principal place of business of the converted entity, if the
converted entity is a foreign other business entity; or (2) the
office at which records are to be kept under Section 15614 if the
converted entity is a domestic limited partnership, or at the office
at which records are to be kept under Section 17057 if the converted
entity is a domestic limited liability company.  Upon the request of
a partner of a converting partnership, the authorized person on
behalf of the converted entity shall promptly deliver to the partner
or the holder of interests or other securities, at the expense of the
converted entity, a copy of the plan of conversion.  A waiver by a
partner of the rights provided in this subdivision shall be
unenforceable.
  SEC. 6.  Section 16905 of the Corporations Code is amended to read:

   16905.  (a) The conversion of a partnership into a foreign other
business entity shall comply with Section 16902.
   (b) If the partnership is converting into a foreign other business
entity, then the conversion proceedings shall be in accordance with
the laws of the state or place of organization of the foreign other
business entity and the conversion shall become effective in
accordance with that law.
   (c) (1) Unless a statement of conversion has been filed to effect
the conversion, the converted foreign partnership or foreign other
business entity shall promptly notify the Secretary of State of the
mailing address of its agent for service of process, its chief
executive office, and of any change of address.  To enforce an
obligation of a partnership that has converted to a foreign
partnership or foreign other business entity, the Secretary of State
shall only be the agent for service of process in an action or
proceeding against the converted foreign partnership or foreign other
business entity, if the agent designated for the service of process
for that entity is a natural person and cannot be found with due
diligence or if the agent is a corporation and no person, to whom
delivery may be made, may be located with due diligence, or if no
agent has been designated and if no one of the officers, partners,
managers, members, or agents of that entity may be located after
diligent search, and it is so shown by affidavit to the satisfaction
of the court.  The court then may make an order that service be made
by personal delivery to the Secretary of State or to an assistant or
deputy Secretary of State of two copies of the process together with
two copies of the order, and the order shall set forth an address to
which the process shall be sent by the Secretary of State.  Service
in this manner is deemed complete on the 10th day after delivery of
the process to the Secretary of State.
   (2) Upon receipt of the process and order and the fee set forth in
Section 12206 of the Government Code, the Secretary of State shall
provide notice to the entity of the service of the process by
forwarding by certified mail, return receipt requested, a copy of the
process and order to the address specified in the order.
   (3) The Secretary of State shall keep a record of all process
served upon the Secretary of State and shall record therein the time
of service and the Secretary of State's action with respect thereto.
The certificate of the Secretary of State, under the Secretary of
State's official seal, certifying to the receipt of process, the
providing of notice thereof to the entity, and the forwarding of the
process, shall be competent and prima facie evidence of the matters
stated therein.
  SEC. 7.  Section 16906 of the Corporations Code is amended to read:

   16906.  (a) If the converting partnership has filed a statement of
partnership authority under Section 16303 that is effective at the
time of the conversion, then upon conversion to a domestic limited
partnership or limited liability company, the certificate of limited
partnership or articles of organization filed by the converted
entity, as applicable, shall contain a statement of conversion, in
that form as may be prescribed by the Secretary of State.  If the
converting partnership has not filed a statement of partnership
authority under Section 16303 that is effective at the time of the
conversion, upon conversion to a domestic limited partnership or
limited liability company, the converted entity may, but is not
required to file, on its certificate of limited partnership or
articles of organization, a statement of conversion.  A statement of
conversion shall set forth all of the following:
   (1) The name and the Secretary of State's file number, if any, of
the converting partnership.
   (2) A statement that the principal terms of the plan of conversion
were approved by a vote of the partners, which equaled or exceeded
the vote required under Section 16903.
   (b) A partnership converting to a foreign other business entity
that has filed a statement of partnership authority under Section
16303 that is effective at the time of conversion may file a
certificate of conversion with the Secretary of State.  The
certificate of conversion shall contain the following:
   (1) The names of the converting partnership and the converted
entity.
   (2) The street address of the converted entity's chief executive
office and of an office in this state, if any.
   (3) The form of organization of the converted entity.
   (c) The filing with the Secretary of State of a certificate of
limited partnership or articles of organization containing a
statement of conversion as set forth in subdivision (a) or a
certificate of conversion filed pursuant to subdivision (b) shall
have the effect of the filing of a cancellation by the converting
partnership of any statement of partnership authority filed by it.
  SEC. 8.  Section 16907 of the Corporations Code is amended to read:

   16907.  (a) Whenever a partnership or other business entity having
any real property in this state converts into a partnership or an
other business entity pursuant to the laws of this state or of the
state or place in which the other business entity was organized, and
the laws of the state or place of organization (including this state)
of the converting partnership or other business entity provide
substantially that the conversion of a converting entity vests in the
converted partnership or other business entity all the real property
of the converting partnership or converting other business entity,
the filing for record in the office of the county recorder of any
county in this state in which any of the real property of the
converting partnership or converting other business entity is located
of either (1) a certificate of conversion or a certificate of
limited partnership or articles of organization complying with
Section 16906, in such form as prescribed by the Secretary of State,
certified by the Secretary of State, or (2) a copy of a certificate
of conversion, or a certificate of limited partnership, articles of
organization, or other certificate evidencing the creation of a
foreign other business entity by conversion, containing a statement
of conversion, certified by the Secretary of State or an authorized
public official of the state or place pursuant to the laws of which
the conversion is effected, shall evidence record ownership in the
converted partnership or converted other business entity of all
interest of the converting partnership or converting other business
entity in and to the real property located in that county.
   (b) A filed and, if appropriate, recorded certificate of
conversion, certificate of limited partnership, articles of
organization, or other certificate evidencing the creation of an
other business entity by conversion, containing a statement of
conversion, executed and declared to be accurate pursuant to
subdivision (c) of Section 16105, stating the name of the converting
partnership or converting other business entity in whose name
property was held before the conversion and the name of the converted
entity, but not containing all of the other information required by
Section 16906, operates with respect to the entities named to the
extent provided in subdivision (a).
   (c) Recording of a certificate of conversion, or a certificate of
limited partnership, articles of organization, or other certificate
evidencing the creation of another business entity by conversion,
containing a statement of conversion, in accordance with paragraph
(1) of Section 16902 shall create, in favor of bona fide purchasers
or encumbrancers for value, a conclusive presumption that the
conversion was validly completed.
  SEC. 9.  Section 16911 of the Corporations Code is amended to read:

   16911.  (a) Each partnership and other business entity which
desires to merge shall approve an agreement of merger.  The agreement
of merger shall be approved by the number or percentage of partners
specified for merger in the partnership agreement of the constituent
partnership.  If the partnership agreement fails to specify the
required partner approval for merger of the constituent partnership,
then the agreement of merger shall be approved by that number or
percentage of partners specified by the partnership agreement to
approve an amendment to the partnership agreement.  However, if the
merger effects a change for which the partnership agreement requires
a greater number or percentage of partners than that required to
amend the partnership agreement, then the merger shall be approved by
that greater number or percentage.  If the partnership agreement
contains no provision specifying the vote required to amend the
partnership agreement, then the agreement of merger must be approved
by all the partners.  The agreement of merger shall be approved on
behalf of each constituent other business entity by those persons
required to approve the merger by the laws under which it is
organized.  Other persons may be parties to the agreement of merger.
The agreement of merger shall state all of the following:
   (1) The terms and conditions of the merger.
   (2) The name and place of organization of the surviving
partnership or surviving other business entity, and of each
disappearing partnership and disappearing other business entity, and
the agreement of merger may change the name of the surviving
partnership, which new name may be the same as or similar to the name
of a disappearing partnership.
   (3) The manner of converting the partnership interests of each of
the constituent partnerships into interests or other securities of
the surviving partnership or surviving other business entity, and if
partnership interests of any of the constituent partnerships are not
to be converted solely into interest or other securities of the
surviving partnership or surviving other business entity, the cash,
property, rights, interests, or securities which the holders of the
partnership interest are to receive in exchange for the partnership
interests, which cash, property, rights, interests, or securities may
be in addition to or in lieu of interests of other securities of the
surviving partnership or surviving other business entity, or that
the partnership interests are canceled without consideration.
   (4) Any other details or provisions as are required by the laws
under which any constituent other business entity is organized.
   (5) Any other details or provisions that are desired, including,
without limitation, a provision for the treatment of fractional
partnership interests.
   (b) If the partnership is merging into a limited partnership, then
in addition to the approval of the partners as set forth under
subdivision (a), the agreement of merger must be approved by all
partners who will become general partners of the surviving limited
partnership upon the effectiveness of the merger.
   (c) Notwithstanding its prior approval, an agreement of merger may
be amended before the merger takes effect if the amendment is
approved by the partners of each constituent partnership, in the same
manner as required for approval of the original agreement of merger,
and by each of the constituent other business entities.
   (d) The partners of a constituent partnership may in their
discretion, abandon a merger, subject to the contractual rights, if
any, of third parties, including other constituent partnerships and
constituent other business entities, if the abandonment is approved
by the partners of the constituent partnership in the same manner as
required for approval of the original agreement of merger.
   (e) An agreement of merger approved in accordance with subdivision
(a) may (1) effect any amendment to the partnership agreement of any
domestic constituent partnership or (2) effect the adoption of a new
partnership agreement for a domestic constituent partnership if it
is the surviving partnership in the merger.  Any amendment to a
partnership agreement or adoption of a new partnership agreement made
pursuant to the foregoing sentence shall be effective at the
effective time or date of the merger.
   (f) The surviving partnership or surviving other business entity
shall keep the agreement of merger at the principal place of business
of the surviving entity if the surviving entity is a partnership or
a foreign other business entity, at the office referred to in Section
1500 if the surviving entity is a domestic corporation, at the
office referred to in subdivision (a) of Section 15614 if the
surviving entity is a domestic limited partnership, or at the office
referred to in Section 17057 if the surviving entity is a domestic
limited liability company and, upon the request of a partner of a
constituent partnership or a holder of interests or other securities
of a constituent other business entity, the authorized person on
behalf of the partnership or the surviving other business entity
shall promptly deliver to the partner or the holder of interests or
other securities, at the expense of the surviving partnership or
surviving other business entity, a copy of the agreement of merger.
A waiver by a partner or holder of interests or other securities of
the rights provided in this subdivision shall be unenforceable.
  SEC. 10.  Section 16914 of the Corporations Code is amended to
read:
   16914.  (a) When a merger takes effect, all of the following
apply:
   (1) The separate existence of the disappearing partnerships and
disappearing other business entities ceases and the surviving
partnership or surviving other business entity shall succeed, without
other transfer, act or deed, to all the rights and property whether
real, personal, or mixed, of each of the disappearing partnerships
and disappearing other business entities and shall be subject to all
the debts and liabilities of each in the same manner as if the
surviving partnership or surviving other business entity had itself
incurred them.
   (2) All rights of creditors and all liens upon the property of
each of the constituent partnerships and constituent other business
entities shall be preserved unimpaired and may be enforced against
the surviving partnership or the surviving other business entity to
the same extent as if the debt, liability, or duty that gave rise to
that lien had been incurred or contracted by it, provided that the
liens upon the property of a disappearing partnership or disappearing
other business entity shall be limited to the property affected
thereby immediately prior to the time the merger is effective.
   (3) Any action or proceeding pending by or against any
disappearing partnership or disappearing other business entity may be
prosecuted to judgment, which shall bind the surviving partnership
or surviving other business entity, or the surviving partnership or
surviving other business entity may be proceeded against or be
substituted in the disappearing partnership's or the disappearing
other business entity's place.
   (b)  (1) Unless a certificate of merger has been filed to effect
the merger, the surviving foreign entity shall promptly notify the
Secretary of State of the mailing address of its agent for service of
process, its chief executive office, and of any change of address.
To enforce an obligation of a partnership that has merged with a
foreign partnership or foreign other business entity, the Secretary
of State shall only be the agent for service of process in an action
or proceeding against the surviving foreign partnership or foreign
other business entity, if the agent designated for the service of
process for that entity is a natural person and cannot be located
with due diligence or if the agent is a corporation and no person, to
whom delivery may be made, can be located with due diligence, or if
no agent has been designated and if no one of the officers, partners,
managers, members, or agents of the entity can be located after
diligent search, and it is so shown by affidavit to the satisfaction
of the court.  The court then may make an order that service be made
by personal delivery to the Secretary of State or to an assistant or
deputy Secretary of State of two copies of the process together with
two copies of the order, and the order shall set forth an address to
which the process shall be sent by the Secretary of State.  Service
in this manner is deemed complete on the 10th day after delivery of
the process to the Secretary of State.
   (2) Upon receipt of the process and order and the fee set forth in
Section 12206 of the Government Code, the Secretary of State shall
provide notice to the entity of the service of the process by
forwarding by certified mail, return receipt requested, a copy of the
process and order to the address specified in the order.
   (3) The Secretary of State shall keep a record of all process
served upon the Secretary of State and shall record therein the time
of service and the Secretary of State's action with respect thereto.
The certificate of the Secretary of State, under the Secretary of
State's official seal, certifying to the receipt of process, the
providing of notice thereof to the entity, and the forwarding of the
process, shall be competent and prima facie evidence of the matters
stated therein.
   (c) A partner of the surviving partnership or surviving limited
partnership, a member of the surviving limited liability company, a
shareholder of the surviving corporation, or a holder of equity
securities of the surviving other business entity is liable for all
of the following:
   (1) All obligations of a party to the merger for which that person
was personally liable before the merger.
   (2) All other obligations of the surviving entity incurred before
the merger by a party to the merger, but those obligations may be
satisfied only out of property of the entity.
   (3) All obligations of the surviving entity incurred after the
merger takes effect, but those obligations may be satisfied only out
of property of the entity if that person is a limited partner, a
shareholder in a corporation, or, unless expressly provided otherwise
in the articles of organization or other governing documents, a
member of a limited liability company or a holder of equity
securities in a surviving other business entity.
   (d) If the obligations incurred before the merger by a party to
the merger are not satisfied out of the property of the surviving
partnership or surviving other business entity, the general partners
of that party immediately before the effective date of the merger, to
the extent such party was a partnership or a limited partnership,
shall contribute the amount necessary to satisfy that party's
obligations to the surviving entity, in the manner provided in
Section 16807 or in the limited partnership act of the jurisdiction
in which the party was formed, as the case may be, as if the merged
party were dissolved.
   (e) A partner of a domestic disappearing partnership, who does not
vote in favor of the merger and does not agree to become a partner,
member, shareholder, or holder of interest or
                       equity securities of the surviving partnership
or surviving other business entity shall have the right to
dissociate from the partnership, as of the date the merger takes
effect.  Within 10 days after the approval of the merger by the
partners as required under this article, each domestic disappearing
partnership shall send notice of the approval of the merger to each
partner that has not approved the merger, accompanied by a copy of
Section 16701 and a brief description of the procedure to be followed
under that section if the partner wishes to dissociate from the
partnership.  A partner that desires to dissociate from a
disappearing partnership shall send written notice of such
dissociation within 30 days after the date of the notice of the
approval of the merger.  The disappearing partnership shall cause the
partner's interest in the entity to be purchased under Section
16701.  The surviving entity is bound under Section 16702 by an act
of a general partner dissociated under this subdivision, and the
partner is liable under Section 16703 for transactions entered into
by the surviving entity after the merger takes effect.  The
dissociation of a partner in connection with a merger pursuant to the
terms of this subdivision shall not be deemed a wrongful
disassociation under Section 16602.
  SEC. 11.  Section 16915 of the Corporations Code is amended to
read:
   16915.  (a) In a merger involving only partnerships, or in a
merger to which a domestic partnership and an other business entity
is a party but in which no other domestic other business entity is a
party, the surviving partnership or surviving foreign other business
entity may file with the Secretary of State a statement that one or
more partnerships have merged into the surviving partnership or
surviving other business entity.  A statement of merger shall contain
the following:
   (1) The name of each partnership or other business entity that is
a party to the merger.
   (2) The name of the surviving entity into which the other
partnerships or other business entities where merged.
   (3) The street address of the surviving entity's chief executive
office and of an office in this state, if any.
   (4) Whether the surviving entity is a partnership or an other
business entity, specifying the type of the entity.
   (b) In a merger involving a domestic partnership in which a
domestic other business entity is also a party, after approval of the
merger by the constituent partnerships and any constituent other
business entities, the constituent partnerships and constituent other
business entities shall file a certificate of merger in the office
of but on a form prescribed by, the Secretary of State, and if the
surviving entity is a domestic corporation or a foreign corporation
in a merger in which a domestic corporation is a constituent party,
the surviving corporation shall file in the office of the Secretary
of State a copy of the agreement of merger and attachments required
pursuant to paragraph (1) of subdivision (g) of Section 1113.  The
certificate of merger shall be executed and acknowledged by each
domestic constituent partnership by two partners (unless a lesser
number is provided in the partnership agreement) and by each foreign
constituent partnership by one or more partners, and by each
constituent other business entity by those persons required to
execute the certificate of merger by the laws under which the
constituent other business entity is organized.  The certificate of
merger shall set forth all of the following:
   (1) The names and the Secretary of State's file numbers, if any,
of each of the constituent partnerships and constituent other
business entities, separately identifying the disappearing
partnerships and disappearing other business entities and the
surviving partnership or surviving other business entity.
   (2) If a vote of the partners was required under Section 16911, a
statement that the principal terms of the agreement of merger were
approved by a vote of the partners, which equaled or exceeded the
vote required.
   (3) If the surviving entity is a domestic partnership and not an
other business entity, any change to the information set forth in any
filed statement of partnership authority of the surviving
partnership resulting from the merger, including any change in the
name of the surviving partnership resulting from the merger.  The
filing of a certificate of merger setting forth any changes to any
filed statement of partnership authority of the surviving partnership
shall have the effect of the filing of a certificate of amendment of
the statement of partnership authority by the surviving partnership,
and the surviving partnership need not file a certificate of
amendment under Section 16015 to reflect those changes.
   (4) The future effective date or time (which shall be a date or
time certain not more than 90 days subsequent to the date of filing)
of the merger, if the merger is not to be effective upon the filing
of the certificate of merger with the office of the Secretary of
State.
   (5) If the surviving entity is an other business entity or a
foreign partnership, the full name, type of entity, legal
jurisdiction in which the entity was organized and by whose laws its
internal affairs are governed, and the address of the principal place
of business of the entity.
   (6) Any other information required to be stated in the certificate
of merger by the laws under which each constituent other business
entity is organized.
   (c) A statement of merger or a certificate of merger, as is
applicable under subdivision (a) or (b), shall have the effect of the
filing of a cancellation for each disappearing partnership of any
statement of partnership authority filed by it.
  SEC. 12.  Section 16916 of the Corporations Code is amended to
read:
   16916.  (a) Whenever a domestic or foreign partnership or other
business entity having any real property in this state merges with
another partnership or other business entity pursuant to the laws of
this state or of the state or place in which any constituent
partnership or constituent other business entity was organized, and
the laws of the state or place of organization (including this state)
of any disappearing partnership or disappearing other business
entity provide substantially that the making and filing of a
statement of merger, agreement of merger, or certificate of merger
vests in the surviving partnership or surviving other business entity
all the real property of any disappearing partnership and
disappearing other business entity, the filing for record in the
office of the county recorder of any county in this state in which
any of the real property of the disappearing partnership or
disappearing other business entity is located of either (1) a
certificate of merger or agreement of merger certified by the
Secretary of State, or other certificate prescribed by the Secretary
of State, or (2) a copy of the statement of merger, agreement of
merger, or certificate of merger, certified by the Secretary of State
or an authorized public official of the state or place pursuant to
the laws of which the merger is effected, shall evidence record
ownership in the surviving partnership or surviving other business
entity of all interest of such disappearing partnership or
disappearing other business entity in and to the real property
located in that county.
   (b) A filed and, if appropriate, recorded statement of merger,
executed and declared to be accurate pursuant to subdivision (c) of
Section 16105, stating the name of a partnership or other business
entity that is a party to the merger in whose name property was held
before the merger and the name of the surviving entity, but not
containing all of the other information required by Section 16915,
operates with respect to the partnerships or other business entities
named to the extent provided in subdivision (a).
   (c) Recording of the certificate of merger in accordance with
subdivision (a) shall create, in favor of bona fide purchasers or
encumbrancers for value, a conclusive presumption that the merger was
validly completed.
  SEC. 13.  Chapter 11.5 (commencing with Section 17540.1) is added
to Title 2.5 of the Corporations Code, to read:

      CHAPTER 11.5.  CONVERSION

   17540.1.  For purposes of this chapter, the following definitions
shall apply:
   (a) "Converted entity" means the other business entity or foreign
limited liability company that results from a conversion of a
domestic limited liability company under this chapter.
   (b) "Converted limited liability company" means a domestic limited
liability company that results from a conversion of an other
business entity or a foreign limited liability company pursuant to
Section 17540.8.
   (c) "Converting limited liability company" means a domestic
limited liability company that converts to an other business entity
or a foreign limited liability company pursuant to this chapter.
   (d) "Converting entity" means an other business entity or foreign
limited liability company that converts to a domestic limited
liability company pursuant to the terms of Section 17540.8.
   17540.2.  A limited liability company may be converted into an
other business entity or a foreign limited liability company pursuant
to this chapter if, pursuant to the proposed conversion, each of the
members of the converting limited liability company would receive a
percentage interest in profits and capital of the converted entity
equal to that member's percentage interest in profits and capital of
the converting limited liability company as of the effective time of
the conversion.  Notwithstanding this section, the conversion of a
limited liability company to an other business entity or a foreign
limited liability company may be effected only if both of the
following conditions are complied with:
   (a) The law under which the converted entity will exist expressly
permits the formation of that entity pursuant to a conversion.
   (b) The limited liability company complies with any and all other
requirements of any other law that applies to conversion to the
converted entity.
   17540.3.  (a) A limited liability company that desires to convert
to an other business entity or a foreign limited liability company
shall approve a plan of conversion.
   The plan of conversion shall state all of the following:
   (1) The terms and conditions of the conversion.
   (2) The place of the organization of the converted entity and of
the converting limited liability company and the name of the
converted entity after conversion.
   (3) The manner of converting the membership interests of each of
the members into securities of, or interests in, the converted
entity.
   (4) The provisions of the governing documents for the converted
entity, including the partnership agreement, to which the holders of
interests in the converted entity are to be bound.
   (5) Any other details or provisions that are required by the laws
under which the converted entity is organized, or that are desired by
the parties.
   (b) The plan of conversion shall be approved by a vote of a
majority in interest of the members of the converting limited
liability company, or a greater percentage of the voting interests of
members as may be specified in the articles of organization or
written operating agreement of the converting limited liability
company.  However, if the members of the limited liability company
would become personally liable for any obligations of the converted
entity as a result of the conversion, the plan of conversion shall be
approved by all of the members of the converting limited liability
company, unless the plan of conversion provides that all members will
have dissenters' rights as provided in Chapter 13 (commencing with
Section 17600).
   (c) If the limited liability company is converting into a limited
partnership, then in addition to the approval of the members set
forth in subdivision (b), the plan of conversion shall be approved by
those members who will become general partners of the converted
limited partnership pursuant to the plan of conversion.
   (d) Upon the effectiveness of the conversion, all members of the
converting limited liability company, except those that exercise
dissenters' rights as provided in Chapter 13 (commencing with Section
17600) shall be deemed parties to any governing documents for the
converted entity adopted as part of the plan of conversion,
irrespective of whether or not a member has executed the plan of
conversion or such governing documents for the converted entity.  Any
adoption of governing documents made pursuant thereto shall be
effective at the effective time or date of the conversion.
   (e) Notwithstanding its prior approval, a plan of conversion may
be amended before the conversion takes effect if the amendment is
approved by the members of the converting limited liability company
in the same manner as was required for approval of the original plan
of conversion.
   (f) A plan of conversion may be abandoned by the members of a
converting limited liability company in the manner as required for
approval of the plan of conversion, subject to the contractual rights
of third parties, at any time before the conversion is effective.
   (g) The converted entity shall keep the plan of conversion at the
principal place of business of the converted entity if the converted
entity is a domestic partnership or foreign other business entity or
at the office at which records are to be kept under Section 15614 if
the converted entity is a domestic limited partnership. Upon the
request of a member of a converting limited liability company, the
authorized person on behalf of the converted entity shall promptly
deliver to the member or the holder of interests or other securities,
at the expense of the converted entity, a copy of the plan of
conversion.  A waiver by a member of the rights provided in this
subdivision shall be unenforceable.
   17540.4.  (a) A conversion into an other business entity or a
foreign limited liability company shall become effective upon the
earliest date that all of the following occur:
   (1) The approval of the plan of conversion by the members of the
converting limited liability company as provided in Section 17540.3.

   (2) The filing of all documents required by law to effect the
conversion and create the converted entity, which documents shall
also contain a statement of conversion, if required under Section
17540.6.
   (3) The occurrence of the effective date, if set forth in the plan
of conversion.
   (b) A copy of the statement of partnership authority or
certificate of limited partnership complying with Section 17540.6, if
applicable, duly certified by the Secretary of State, is conclusive
evidence of the conversion of the limited liability company.
   17540.5.  (a) The conversion of a limited liability company into a
foreign other business entity or a foreign limited liability company
shall be required in order to comply with Section 17540.2.
   (b) If the limited liability company is converting into a foreign
other business entity or a foreign limited liability company, those
conversion proceedings shall be in accordance with the laws of the
state or place of organization of the foreign other business entity
or foreign limited liability company and the conversion shall become
effective in accordance with that law.
   (c) (1) To enforce an obligation of a limited liability company
that has converted to a foreign limited liability company or foreign
other business entity, the Secretary of State shall only be the agent
for service of process in an action or proceeding against that
converted foreign entity, if the agent designated for the service of
process for the entity is a natural person and cannot be located with
due diligence or if the agent is a corporation and no person, to
whom delivery may be made, may be located with due diligence, or if
no agent has been designated and if no one of the officers, partners,
managers, members, or agents of that entity may be located after
diligent search, and it is so shown by affidavit to the satisfaction
of the court.  The court then may make an order that service be made
by personal delivery to the Secretary of State or to an assistant or
deputy Secretary of State of two copies of the process together with
two copies of the order, and the order shall set forth an address to
which the process shall be sent by the Secretary of State.  Service
in this manner is deemed complete on the 10th day after delivery of
the process to the Secretary of State.
   (2) Upon receipt of the process and order and the fee set forth in
Section 12206 of the Government Code, the Secretary of State shall
give notice to such entity of the service of the process by
forwarding by certified mail, return receipt requested, a copy of the
process and order to the address specified in the order.
   (3) The Secretary of State shall keep a record of all process
served upon the Secretary of State and shall record therein the time
of service and the Secretary of State's action with respect thereto.
The certificate of the Secretary of State, under the Secretary of
State's official seal, certifying to the receipt of process, the
giving of notice thereof to that entity, and the forwarding of the
process, shall be competent and prima facie evidence of the matters
stated therein.
   17540.6.  (a) Upon conversion of a limited liability company:
   (1) If the limited liability company is converting into a domestic
limited partnership, a statement of conversion shall be completed on
the certificate of limited partnership for the converted entity.
   (2) If the limited liability company is converting into a domestic
partnership, a statement of conversion shall be completed on the
statement of partnership authority for the converted entity, or if no
statement of partnership authority is filed then a certificate of
conversion shall be filed separately.
   (3) If the limited liability company is converting into a foreign
limited liability company or foreign other business entity, a
certificate of conversion shall be filed with the Secretary of State.

   (b) Any certificate or statement of conversion shall be executed
and acknowledged by all of the managers, unless a lesser number is
provided in the articles of organization or the operating agreement
of the converting limited liability company, and shall set forth all
of the following:
   (1) The name and the Secretary of State's file number of the
converting limited liability company.
   (2) A statement that the principal terms of the plan of conversion
were approved by a vote of the members, which equaled or exceeded
the vote required under Section 17540.3, specifying each class
entitled to vote and the percentage vote required of each class.
   (3) The form of organization of the converted entity.
   (c) The filing with the Secretary of State of a certificate of
conversion or an organizational document containing a statement of
conversion as set forth in subdivision (a) shall have the effect of
the filing of a certificate of cancellation by the converting limited
liability company and no converting limited liability company that
has made the filing is required to file a certificate of dissolution
or a certificate of cancellation under Section 17356 as a result of
that conversion.
   17540.7.  (a) Whenever a limited liability company or other
business entity having any real property in this state converts into
a limited liability company or an other business entity pursuant to
the laws of this state or of the state or place in which the limited
liability company or other business entity was organized, and the
laws of the state or place of organization, including this state, of
the converting limited liability company or other converting entity
provide substantially that the conversion vests in the converted
limited liability company or other converted entity all the real
property of the converting limited liability company or other
converting entity, the filing for record in the office of the county
recorder of any county in this state in which any of the real
property of the converting limited liability company or other
converting entity is located of either (1) a certificate of
conversion, statement of partnership authority, certificate of
limited partnership, or articles of organization complying with
Section 17540.6, in the form prescribed and certified by the
Secretary of State, or (2) a copy of a certificate of conversion, or
a statement of partnership authority, certificate of limited
partnership, articles of organization, or other certificate
evidencing the creation of a foreign other business entity or foreign
limited liability company by conversion, containing a statement of
conversion, certified by the Secretary of State or an authorized
public official of the state or place pursuant to the laws of which
the conversion is effected, shall evidence record ownership in the
converted limited liability company or other converted entity of all
interest of the converting limited liability company or other
converting entity in and to the real property located in that county.

   (b) A filed and, if appropriate, recorded certificate of
conversion, or a statement of partnership authority, certificate of
limited partnership or articles of organization or other certificate
evidencing the formation of a foreign other business entity or a
foreign limited liability company filed pursuant to Section 17540.6
containing a statement of conversion, stating the name of the
converting limited liability company or other converting entity in
whose name property was held before the conversion and the name of
the converted entity or converted limited liability company, but not
containing all of the other information required by Section 17540.6,
operates with respect to the converted entities named to the extent
provided in subdivision (a).
   (c) Recording of a certificate of conversion or a statement of
partnership authority, certificate of limited partnership or articles
of organization, or other certificate evidencing the creation of an
other business entity or a limited liability company by conversion,
containing a statement of conversion, in accordance with subdivision
(a), shall create, in favor of bona fide purchasers or encumbrances
for value, a conclusive presumption that the conversion was validly
completed.
   17540.8.  (a) An other business entity or foreign limited
liability company may be converted to a domestic limited liability
company pursuant to this chapter only if the converting entity is not
prohibited by the law under which it is organized to effect the
conversion.
   (b) An other business entity or a foreign limited liability
company that desires to convert into a domestic limited liability
company shall approve a plan of conversion or such instrument as is
required to be approved to effect the conversion pursuant to the laws
under which that entity is organized.
   (c) The conversion of an other business entity or a foreign
limited liability company shall be approved by that number or
percentage of the partners, members, or holders of interest of the
converting entity as is required by the law under which that entity
is organized, or a greater or lesser percentage, subject to
applicable laws, as set forth in the converting entity's partnership
agreement, articles of organization, operating agreement, or other
governing document.
   (d) The conversion by an other business entity or foreign limited
liability company shall be effective under this chapter at the time
the conversion is effective under the law under which the converting
entity is organized as long as the articles of organization have been
filed with the Secretary of State.  If the converting entity's
governing law is silent as to the effectiveness of the conversion,
the conversion shall be effective upon the completion of all acts
required under this title to form a limited liability company.
   17540.9.  (a) An entity that converts into another entity pursuant
to this chapter is for all purposes the same entity that existed
before the conversion.
   (b) Upon a conversion taking effect, all of the following apply:
   (1) All the rights and property, whether real, personal, or mixed,
of the converting entity or converting limited liability company are
vested in the converted entity or converted limited liability
company.
   (2) All debts, liabilities, and obligations of the converting
entity or converting limited liability company continue as debts,
liabilities, and obligations of the converted entity or converted
limited liability company.
   (3) All rights of creditors and liens upon the property of the
converting entity or converting limited liability company shall be
preserved unimpaired and remain enforceable against the converted
entity or converted limited liability company to the same extent as
against the converting entity or converting limited liability company
as if the conversion had not occurred.
   (4) Any action or proceeding pending by or against the converting
entity or converting limited liability company may be continued
against the converted entity or converted limited liability company
as if the conversion had not occurred.
   (c) A member of a converting limited liability company is liable
for:
   (1) All obligations of the converting limited liability company
for which the member was personally liable before the conversion.
   (2) All obligations of the converted entity incurred after the
conversion takes effect, but those obligations may be satisfied only
out of property of the entity if that member is a limited partner, a
shareholder in a corporation, or unless expressly provided otherwise
in the articles of organization or other governing documents, a
member of a converted limited liability company or a holder of equity
securities in an other converted entity if the holders of equity
securities in such entity are not personally liable for the
obligations of such entity under the law under which that entity is
organized or its governing documents.
   (d) A member of a converted limited liability company remains
liable for any and all obligations of the converting entity for which
the member was personally liable before the conversion, but only to
the extent that the member was personally liable for the obligations
of the converting entity prior to the conversion.
   (e) If the other party to a transaction with the limited liability
company reasonably believes when entering the transaction that the
limited liability company member is a general partner, the limited
liability company member is liable for an obligation incurred by the
                                          limited liability company
within 90 days after the conversion takes effect.  The limited
liability company member's liability for all other obligations of the
limited liability company incurred after the conversion takes effect
is that of a limited liability company member.
  SEC. 14.  Section 17600 of the Corporations Code is amended to
read:
   17600.  (a) For purposes of this chapter, "reorganization" refers
to any of the following:
   (1) A conversion pursuant to Chapter 11.5 (commencing with Section
17540.1).
   (2) A merger pursuant to Chapter 12 (commencing with Section
17550).
   (3) The acquisition by one limited liability company, in exchange,
in whole or part, for its membership interests (or the membership
interests or equity securities of a limited liability company or
other business entity that is in control of the acquiring limited
liability company), of membership interests or equity securities of
another limited liability company or other business entity if,
immediately after the acquisition, the acquiring limited liability
company has control of the other limited liability company or other
business entity.
   (4) The acquisition by one limited liability company in exchange
in whole or in part for its membership interests (or the membership
interests or equity securities of a limited liability company or
other business entity that is in control of the acquiring limited
liability company) or for its debt securities (or debt securities of
a limited liability company or other business entity that is in
control of the acquiring limited liability company) that are not
adequately secured and that have a maturity date in excess of five
years after the consummation of the acquisition, or both, of all or
substantially all of the assets of another limited liability company
or other business entity.
   (b) For purposes of this chapter, "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a limited liability company or other
business entity.
